Here’s an interesting story reporting what seems to be a serious commitment by the Party to implement centralized funding of all courts. The commitment comes in a document adopted on Nov. 28 by the Politburo entitled “Opinion of the Central Political-Legal Commission on Several Issues in the Deepening of Reform in the Judicial System and the Work Mechanism” (中央政法委员会关于深化司法体制和工作机制改革若干问题的意见).

Local judicial protectionism—the phenomenon of local courts favoring local parties because local political power appoints their judges and controls their finances—has long been decried by Chinese commentators, and centralized funding of courts has been one important element of proposed solutions. If this proposal is actually realized, it’s reasonable to think that it will certainly help. But it won’t completely solve the problem of court susceptibility to pressures from local politicians.

First, local political power (I use this vague term because formal and actual power exist in different institutions) will still control personnel appointments and dismissals.

Second, courts and their personnel need more than money from local governments: they need building permits, schooling for children, jobs for relatives, and cooperation in enforcement of judgments, to name just a few things. (My favorite story involves a judge in Fujian who executed a judgment against a local enterprise and the next day found that his daughter had been transferred by her employer, the county, to an isolated post on a small island.)

Third, courts will still want local government financial support because it’s very unlikely that any formula worked out by the central government will in fact distribute to each court just what it needs, no more and no less. This is in part because “need” is not an absolute concept; courts would always rather have more than less. And it’s in part because the workload of courts in different areas is vastly different (the judges in one court in Dongguan have a caseload 14 times heavier than the national average), and probably no formula, let alone a formula subject to political pressures, can get it exactly right. As a result, courts at least in richer areas will be going to local government to ask for supplemental funding, and local governments may well want to give it to them for various reasons. This will recreate a certain level of financial dependency, although perhaps of a less extreme form than before. In other words, perhaps local government will no longer be able to threaten courts with the loss of all their cars. But they could still decline to upgrade old, small, domestic cars to big, new, imported ones. The refusal to bribe can be similar in effect to extortion.

The article contains some interesting numbers, by the way. The writer estimates the average annual cost of operating a court at (very roughly and subject to great variations across the country) 10 million yuan. Multiply this by China’s 3631 courts (3000+ basic-level courts, 330 intermediate-level courts, and 31 higher-level courts; the Supreme People’s Court is already centrally funded), and you get 36.3 billion yuan. Further add in the 3 or 4 billion annually that the central government currently puts into funding of local courts in China’s poorer provinces, and you get an annual funding need of about 40 billion yuan. How does that look as part of the national budget? China’s central government spent 3.06 trillion yuan in 2007; this was projected to rise by 12.2% in 2008, making 3.43 trillion yuan. The cost of funding all courts below the Supreme People’s Court would thus be about 1.17% of central government expenditures.

This might seem like a small amount: wouldn’t it be easy for the state to come up with this money if it thought court funding was important? But assuming people fight as hard in China as they do in the US for a slice of the national budget, 1.17% is a lot of money. The US federal courts are constantly having to fight for what they think they need; they requested a budget of $6.51 billion for 2008, and got $6.246 billion. The amount requested is a paltry 0.22% of the federal budget (even less if you don't count the substantial rent payments the courts make back to the federal government for the use of court buildings), but even that was apparently too much. (Note that the cost of operating the US court system is of course much higher than that, since the federal budget doesn’t pay for the state court system.)

My conclusion is that this proposal is very far from a done deal. So far it’s a policy proposal from the Central Political-Legal Commission that has been endorsed by the Politburo. But it’s going to require a lot of money relative to the size of the national budget (a lot not in terms of percentages, but in terms of what I expect will be the political muscle needed to get it through), and it will by no means solve all the problems it’s meant to address.

Here's a report of plans by a Beijing lawyer to sue Baidu (an internet search company) on the grounds that it violated the AML by abusing its dominant position in the search market through its policy of blocking web sites that don't pay to be listed. (Baidu denies blocking, but it seems clear that web sites that pay get higher rankings in search results, something that has led to a great deal of negative publicity for Baidu recently.)

It will be interesting to see if this lawsuit goes anywhere. Can the AML be used to dictate a company's business model in this way? If Baidu had not bothered to hide its practice of selling rankings, could there possibly be an AML claim? And if not, how does the concealment change the argument?